Tredegar Reports First Quarter 2024 Results
Tredegar reported first quarter 2024 net income of $3.3 million compared to a loss in the same period last year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) for Aluminum Extrusions decreased, while PE Films and Flexible Packaging Films showed improvement. The sale of Terphane is pending approval. Debt levels increased due to higher working capital.
Net income for the first quarter of 2024 totaled $3.3 million, a significant improvement from the loss reported in the first quarter of 2023.
PE Films experienced exceptional EBITDA of $6.9 million in the first quarter of 2024 compared to $1.8 million in the first quarter of 2023, showcasing a substantial increase.
Flexible Packaging Films saw a 10.7% increase in sales volume in the first quarter of 2024 compared to the same period in 2023, resulting in improved financial performance.
EBITDA for Aluminum Extrusions decreased to $12.5 million in the first quarter of 2024 compared to $14.6 million in the same period last year, indicating a decline in performance.
The sale of Terphane is pending approval from competition authorities in Brazil and Colombia, leading to uncertainty regarding the completion of the transaction.
Debt levels increased in the first quarter of 2024 due to higher net working capital to support the recovery in business operations, potentially impacting financial leverage.
Insights
Upon reviewing Tredegar Corporation's first quarter 2024 financial results, we note several key figures indicating the company's performance trajectory. The reported net income of
The detail that catches the eye is the EBITDA from ongoing operations for the Aluminum Extrusions and PE Films segments, showing a mixed performance. Although Aluminum Extrusions saw a decrease in EBITDA from
While the company's increasing net new orders and sales volume suggest a positive demand recovery post-pandemic, investors should be cautious about the sales volume drop in Aluminum Extrusions and Flexible Packaging Films. Concerns might also arise from the reported decrease in open orders year-over-year, potentially signaling a slower pace of growth going forward.
In the longer term, the outcomes of the trade case backed by the Aluminum Extruders Council could be instrumental in shaping the competitive landscape for Tredegar's Aluminum Extrusions segment. A favorable final determination towards the end of the third quarter of 2024 might bolster the company's domestic market share and profitability.
The projected capital expenditures and the extended implementation period for new ERP/MES systems indicate continued investment in technological improvements which could enhance future productivity, yet also imply near-term cash outflows.
Furthermore, the status of the agreement to sell Terphane looms as a significant factor that could reshape the company's balance sheet and future strategic focus, with expected net debt-free cash proceeds of
The report's reference to an improved net financial leverage ratio from 3.9x to 3.8x and steady liquidity under the new asset-based lending facility suggest a stabilized financial position, which should be reassuring to shareholders and potential investors. Overall, the company's performance in the first quarter indicates a recovery phase, but with some segments outperforming others, painting a nuanced picture for investors.
From a market perspective, Tredegar's performance in the first quarter demonstrates resilience, particularly in the PE Films segment. The impressive 273.4% increase in EBITDA for PE Films could signal a robust demand in the consumer electronics market, which is noted as a key driver. Investors would be wise to monitor trends in this market since it appears to be a strong contributor to Tredegar's rebound.
The Aluminum Extrusions segment is facing tougher challenges, with a 9.9% decline in sales volume. This could reflect broader industry trends, such as increased remote work impacting the non-residential building and construction market and consequently, demand for aluminum extrusions. However, the sequential quarterly increase in net new orders may hint at an uptick in market demand that could unfold in upcoming quarters.
The competitive dynamics resulting from the preliminary trade case determinations could significantly impact the market landscape for aluminum extrusions in the U.S. Market participants, including Tredegar, could see a shift in competitive advantage depending on the final outcome later in the year.
Considering Tredegar's diverse product offerings in Aluminum Extrusions, PE Films and Flexible Packaging Films, keeping a close eye on the fluctuating demand and pricing in these different markets is important for assessing the company's overall market position. The recovery in some segments paired with the strategic divestiture of Terphane may suggest a calculated pivot in Tredegar's business model to focus on more profitable areas.
Overall, Tredegar's first-quarter performance paints a mixed picture marked by internal segment recoveries and potential shifts in the competitive landscape due to external trade factors. These dynamics will be essential for investors to watch as they may influence the company's market share and profitability going forward.
First quarter 2024 net income (loss) was
First Quarter Financial Results Highlights
-
Earnings before interest, taxes, depreciation and amortization ("EBITDA") from ongoing operations for Aluminum Extrusions was
in the first quarter of 2024 versus$12.5 million in the first quarter of last year and$14.6 million in the fourth quarter of 2023.$8.0 million - Sales volume was 33.8 million pounds in the first quarter of 2024 versus 37.6 million pounds in the first quarter of last year and 32.9 million pounds in the fourth quarter of 2023.
-
Open orders at the end of the first quarter of 2024 were approximately 15 million pounds (versus 27 million pounds in the first quarter of 2023 and 14 million pounds at the end of the fourth quarter of 2023). Net new orders increased
61% and12% in the first quarter of 2024 versus the first quarter of 2023 and fourth quarter of 2023, respectively.
-
EBITDA from ongoing operations for PE Films was
in the first quarter of 2024 versus$6.9 million in the first quarter of 2023 and$1.8 million in the fourth quarter of 2023. Sales volume was 10.0 million pounds in the first quarter of 2024 versus 7.4 million pounds in the first quarter of 2023 and 8.5 million pounds in the fourth quarter of 2023.$4.5 million -
EBITDA from ongoing operations for Flexible Packaging Films (also referred to as "Terphane") was
during the first quarter of 2024 versus$2.0 million in the first quarter of 2023 and$1.4 million during the fourth quarter of 2023. Sales volume was 22.0 million pounds in the first quarter of 2024 versus 19.8 million pounds in the first quarter 2023 and 22.8 million pounds in the fourth quarter of 2023. See the Status of Agreement to Sell Terphane section of this report for information on the sale of Terphane.$2.3 million
John Steitz, Tredegar’s president and chief executive officer, said, “During the first quarter of 2024, we recognized a meaningful profit from ongoing operations for the first time since the first quarter of last year. The bottom of the recent severe down cycle for Bonnell, which we believe was a residual impact of the pandemic and started in the second half of 2022, appears to have occurred in the third quarter of 2023. Net new orders and sales volume have increased sequentially in each quarter since that time. In addition, favorable preliminary determinations have been made by
Mr. Steitz further stated, “The process to complete the closing of our agreement to sell Terphane continues to advance as planned, including the review required by competition authorities in
OPERATIONS REVIEW
Aluminum Extrusions
Aluminum Extrusions (or Bonnell Aluminum) produces high-quality, soft-alloy and medium-strength custom fabricated and finished aluminum extrusions primarily for the following markets: building and construction (B&C), automotive and specialty (which consists of consumer durables, machinery and equipment, electrical and renewable energy, and distribution end-use products). A summary of results for Aluminum Extrusions is provided below:
|
Three Months Ended |
|
Favorable/ (Unfavorable) % Change |
||||||
(In thousands, except percentages) |
March 31, |
|
|||||||
2024 |
|
2023 |
|
||||||
Sales volume (lbs) |
|
33,841 |
|
|
|
37,562 |
|
|
(9.9)% |
Net sales |
$ |
114,222 |
|
|
$ |
133,370 |
|
|
(14.4)% |
Ongoing operations: |
|
|
|
|
|
||||
EBITDA |
$ |
12,540 |
|
|
$ |
14,638 |
|
|
(14.3)% |
Depreciation & amortization |
|
(4,542 |
) |
|
|
(4,411 |
) |
|
(3.0)% |
EBIT* |
$ |
7,998 |
|
|
$ |
10,227 |
|
|
(21.8)% |
Capital expenditures |
$ |
1,550 |
|
|
$ |
7,742 |
|
|
|
* For a reconciliation of this non-GAAP measure to the most directly comparable measure calculated in accordance with GAAP, see the EBITDA from ongoing operations by segment statements in the Financial Tables in this press release. |
The following table presents the sales volume by end use market for the three months ended March 31, 2024 and 2023, and the three months ended December 31, 2023.
|
|
Three Months Ended |
|
Favorable/ |
|
Three Months Ended |
|
Favorable/ |
||||
(In millions of lbs) |
|
March 31, |
|
(Unfavorable) |
|
December 31, |
|
(Unfavorable) |
||||
|
2024 |
|
2023 |
|
% Change |
|
2023 |
|
% Change |
|||
Sales volume by end-use market: |
|
|
|
|
|
|
||||||
Non-residential B&C |
|
20.1 |
|
22.3 |
|
(9.9 |
)% |
|
18.4 |
|
9.2 |
% |
Residential B&C |
|
1.6 |
|
2.5 |
|
(36.0 |
)% |
|
2.0 |
|
(20.0 |
)% |
Automotive |
|
3.2 |
|
3.4 |
|
(5.9 |
)% |
|
3.3 |
|
(3.0 |
)% |
Specialty products |
|
8.9 |
|
9.4 |
|
(5.3 |
)% |
|
9.2 |
|
(3.3 |
)% |
Total |
|
33.8 |
|
37.6 |
|
(9.9 |
)% |
|
32.9 |
|
2.7 |
% |
First Quarter 2024 Results vs. First Quarter 2023 Results
Net sales (sales less freight) in the first quarter of 2024 decreased
Net new orders, which remain low compared to pre-pandemic levels but are growing, increased
Open orders at the end of the first quarter of 2024 were 15 million pounds (versus 14 million pounds at the end of the fourth quarter of 2023 and 27 million pounds at the end of the first quarter of 2023). This level is below the quarterly range of 21 to 27 million pounds in 2019 before pandemic-related disruptions (particularly starting in early 2021 with the re-opening of markets following the rollout of vaccines) that resulted in long lead times, driving a peak in open orders of approximately 100 million pounds during the first quarter of 2022.
The Company is participating as part of a coalition of members of the Aluminum Extruders Council who have filed a trade case with the Department of Commerce (“DOC”) and the
EBITDA from ongoing operations in the first quarter of 2024 decreased
-
Lower volume (
) offset by higher net pricing after the pass-through of metal cost changes ($3.3 million ), lower labor and employee-related costs ($2.0 million ), lower supply expense ($0.6 million ), lower utility expense ($0.6 million ), lower selling, general and administrative ("SG&A") expenses ($0.4 million ) and lower freight rates ($0.3 million ); and$0.2 million -
The timing of the flow-through under the first-in first-out method of aluminum raw material costs passed through to customers, previously acquired at higher prices in a quickly changing commodity pricing environment, resulted in a charge of
in the first quarter of 2024 versus a benefit of$1.2 million in the first quarter of 2023.$1.7 million
Refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk in the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2024 ("First Quarter Form 10-Q") for additional information on aluminum price trends.
Projected Capital Expenditures and Depreciation & Amortization
Capital expenditures for Bonnell Aluminum are projected to be
PE Films
PE Films produces surface protection films, polyethylene overwrap and polypropylene films for other markets. A summary of results for PE Films is provided below:
|
Three Months Ended |
|
Favorable/ (Unfavorable) % Change |
||||||
(In thousands, except percentages) |
March 31, |
|
|||||||
2024 |
|
2023 |
|
||||||
Sales volume (lbs) |
|
10,036 |
|
|
|
7,368 |
|
|
|
Net sales |
$ |
24,735 |
|
|
$ |
20,182 |
|
|
|
Ongoing operations: |
|
|
|
|
|
||||
EBITDA |
$ |
6,904 |
|
|
$ |
1,849 |
|
|
|
Depreciation & amortization |
|
(1,329 |
) |
|
|
(1,643 |
) |
|
|
EBIT* |
$ |
5,575 |
|
|
$ |
206 |
|
|
NM** |
Capital expenditures |
$ |
394 |
|
|
$ |
716 |
|
|
|
* For a reconciliation of this non-GAAP measure to the most directly comparable measure calculated in accordance with GAAP, see the EBITDA from ongoing operations by segment statements in the Financial Tables in this press release. **Not meaningful ("NM") |
First Quarter 2024 Results vs. First Quarter 2023 Results
Net sales in the first quarter of 2024 were
EBITDA from ongoing operations during the first quarter of 2024 was
EBITDA from ongoing operations in the first quarter of 2024 increased
-
A
increase from Surface Protection primarily due to higher contribution margin associated with higher volume ($4.4 million ), favorable pricing ($1.0 million ), operating efficiencies and manufacturing costs savings ($0.3 million ), lower fixed costs ($1.9 million ), and lower SG&A ($0.4 million , including$0.7 million associated with the closure of the Richmond Technical Center in 2023).$0.6 million -
A
increase from overwrap films primarily due to cost improvements.$0.7 million
Refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk in the First Quarter Form 10-Q for additional information on resin price trends.
Projected Capital Expenditures and Depreciation & Amortization
Capital expenditures for PE Films are projected to be
Flexible Packaging Films
Flexible Packaging Films produces polyester-based films for use in packaging applications that have specialized properties, such as heat resistance, strength, barrier protection and the ability to accept high-quality print graphics. A summary of results for Flexible Packaging Films is provided below:
|
Three Months Ended |
|
Favorable/ (Unfavorable) % Change |
||||||
(In thousands, except percentages) |
March 31, |
|
|||||||
2024 |
|
2023 |
|
||||||
Sales volume (lbs) |
|
21,973 |
|
|
|
19,845 |
|
|
|
Net sales |
$ |
30,113 |
|
|
$ |
31,527 |
|
|
(4.5)% |
Ongoing operations: |
|
|
|
|
|
||||
EBITDA |
$ |
1,963 |
|
|
$ |
1,350 |
|
|
|
Depreciation & amortization |
|
(751 |
) |
|
|
(700 |
) |
|
(7.3)% |
EBIT* |
$ |
1,212 |
|
|
$ |
650 |
|
|
|
Capital expenditures |
$ |
518 |
|
|
$ |
605 |
|
|
|
* For a reconciliation of this non-GAAP measure to the most directly comparable measure calculated in accordance with GAAP, see the EBITDA from ongoing operations by segment statements in the Financial Tables in this press release. |
First Quarter 2024 Results vs. First Quarter 2023 Results
Net sales in the first quarter of 2024 decreased
EBITDA from ongoing operations in the first quarter of 2024 increased
-
Lower raw material costs (
), lower fixed costs ($1.9 million ), higher sales volume ($1.7 million ) and lower SG&A ($ 1.0 million ), partially offset by lower selling prices from global excess capacity and margin pressures ($0.2 million ) and higher variable costs ($2.1 million );$1.3 million -
Foreign currency transaction gains (
) in the first quarter of 2024 compared to foreign currency transaction losses ($0.1 million ) in the first quarter of 2023; and$0.1 million -
Net unfavorable foreign currency translation of Real-denominated operating costs (
).$0.9 million
Refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk in the First Quarter Form 10-Q for additional information on polyester fiber and component price trends.
Projected Capital Expenditures and Depreciation & Amortization
Capital expenditures for Flexible Packaging Films are projected to be
Corporate Expenses, Interest & Taxes
Corporate expenses, net in the first three months of 2024 decreased
Interest expense of
The effective tax rate was
Status of Agreement to Sell Terphane
On September 1, 2023, the Company announced that it had entered into a definitive agreement to sell Terphane to Oben Group (the “Contingent Terphane Sale”). Completion of the sale is contingent upon the satisfaction of customary closing conditions, including the receipt of certain competition filing approvals by authorities in
As of March 31, 2024, the Company has reported results for Terphane as a continuing operation, given the status of the approval process by authorities. If the sale transaction is completed, the Company expects to realize after-tax net debt-free cash proceeds of
Total Debt, Financial Leverage and Debt Covenants
Total debt was
The Company has been focused on stringent management of net working capital, capital expenditures and costs during the current slowdown in business. Total debt increased
As of March 31, 2024, the Company was in compliance with all covenants under its
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
Some of the information contained in this press release may constitute “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. When the Company uses the words “believe,” “estimate,” “anticipate,” “appear to,” “expect,” “project,” “plan,” “likely,” “may” and similar expressions, it does so to identify forward-looking statements. Such statements are based on the Company's then current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. It is possible that the Company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these forward-looking statements. Factors that could cause actual results to differ materially from expectations include, without limitation, the following:
- inability to successfully complete strategic dispositions, including the Contingent Terphane Sale, failure to realize the expected benefits of such dispositions and assumption of unanticipated risks in such dispositions;
- inability to successfully transition into an asset-based revolving lending facility;
- noncompliance with any of the financial and other restrictive covenants in the Company's asset-based credit facility;
- the impact of macroeconomic factors, such as inflation, interest rates, recession risks and other lagging effects of the COVID-19 pandemic
- an increase in the operating costs incurred by the Company’s business units, including, for example, the cost of raw materials and energy;
- failure to continue to attract, develop and retain certain key officers or employees;
- disruptions to the Company’s manufacturing facilities, including those resulting from labor shortages;
- inability to develop, efficiently manufacture and deliver new products at competitive prices;
- the impact of the imposition of tariffs and sanctions on imported aluminum ingot used by Bonnell Aluminum;
- failure to prevent foreign companies from evading anti-dumping and countervailing duties;
- unanticipated problems or delays with the implementation of the enterprise resource planning and manufacturing executions systems, or security breaches and other disruptions to the Company's information technology infrastructure;
- loss or gain of sales to significant customers on which the Company’s business is highly dependent;
- inability to achieve sales to new customers to replace lost business;
- failure of the Company’s customers to achieve success or maintain market share;
- failure to protect our intellectual property rights;
-
risks of doing business in countries outside the
U.S. that affect our international operations; - political, economic and regulatory factors concerning the Company’s products;
- competition from other manufacturers, including manufacturers in lower-cost countries and manufacturers benefiting from government subsidies;
- impact of fluctuations in foreign exchange rates;
-
the termination of anti-dumping duties on products imported to
Brazil that compete with products produced by Flexible Packaging; - an information technology system failure or breach;
- the impact of public health epidemics on employees, production and the global economy, such as the COVID-19 pandemic;
- inability to successfully identify, complete or integrate strategic acquisitions; failure to realize the expected benefits of such acquisitions and assumption of unanticipated risks in such acquisitions;
- impairment of the Surface Protection reporting unit's goodwill;
and the other factors discussed in the reports Tredegar files with or furnishes to the Securities and Exchange Commission (the “SEC”) from time to time, including the risks and important factors set forth in additional detail in “Risk Factors” Part I, Item 1A of the Company's Form 10-K for the year ended December 31, 2023. Readers are urged to review and consider carefully the disclosures Tredegar makes in its filings with the SEC.
Tredegar does not undertake, and expressly disclaims any duty, to update any forward-looking statement made in this press release to reflect any change in management’s expectations or any change in conditions, assumptions or circumstances on which such statements are based, except as required by applicable law.
To the extent that the financial information portion of this press release contains non-GAAP financial measures, it also presents both the most directly comparable financial measures calculated and presented in accordance with GAAP and a quantitative reconciliation of the difference between any such non-GAAP measures and such comparable GAAP financial measures. Reconciliations of non-GAAP financial measures are provided in the Notes to the Financial Tables included with this press release and can also be found within “Presentations” in the “Investors” section of our website, www.tredegar.com.
Tredegar uses its website as a channel of distribution of material Company information. Financial information and other material information regarding Tredegar is posted on and assembled in the “Investors” section of its website.
Tredegar Corporation is an industrial manufacturer with three primary businesses: custom aluminum extrusions for the North American building & construction, automotive and specialty end-use markets; surface protection films for high-technology applications in the global electronics industry; and specialized polyester films primarily for the Latin American flexible packaging market. Tredegar had 2023 sales of
Tredegar Corporation |
|||||||
Condensed Consolidated Statements of Income (Loss) |
|||||||
(In Thousands, Except Per-Share Data) |
|||||||
(Unaudited) |
|||||||
|
|
|
|||||
|
|
Three Months Ended |
|||||
|
|
March 31, |
|||||
|
|
2024 |
|
2023 |
|||
Sales |
|
$ |
175,736 |
|
$ |
191,122 |
|
Other income (expense), net (c)(d) |
|
|
8 |
|
|
280 |
|
|
|
|
175,744 |
|
|
191,402 |
|
|
|
|
|
|
|||
Cost of goods sold (c) |
|
|
142,043 |
|
|
159,525 |
|
Freight |
|
|
6,666 |
|
|
6,043 |
|
Selling, R&D and general expenses (c) |
|
|
18,610 |
|
|
20,211 |
|
Amortization of intangibles |
|
|
464 |
|
|
503 |
|
Pension and postretirement benefits |
|
|
54 |
|
|
3,418 |
|
Interest expense |
|
|
3,455 |
|
|
2,311 |
|
Asset impairments and costs associated with exit and disposal activities, net of adjustments (c) |
|
|
507 |
|
|
69 |
|
Total |
|
|
171,799 |
|
|
192,080 |
|
Income (loss) before income taxes |
|
|
3,945 |
|
|
(678 |
) |
Income tax expense (benefit) (c) |
|
|
657 |
|
|
331 |
|
Net income (loss) |
|
$ |
3,288 |
|
$ |
(1,009 |
) |
|
|
|
|
|
|||
Earnings (loss) per share: |
|
|
|
|
|||
Basic |
|
$ |
0.10 |
|
$ |
(0.03 |
) |
Diluted |
|
$ |
0.10 |
|
$ |
(0.03 |
) |
|
|
|
|
|
|||
Shares used to compute earnings (loss) per share: |
|
|
|
|
|||
Basic |
|
|
34,323 |
|
|
33,895 |
|
Diluted |
|
|
34,323 |
|
|
33,895 |
|
Tredegar Corporation |
|||||||
Net Sales and EBITDA from Ongoing Operations by Segment |
|||||||
(In Thousands) |
|||||||
(Unaudited) |
|||||||
|
|
||||||
|
Three Months Ended |
||||||
|
March 31, |
||||||
|
2024 |
|
2023 |
||||
Net Sales |
|
|
|
||||
Aluminum Extrusions |
$ |
114,222 |
|
|
$ |
133,370 |
|
PE Films |
|
24,735 |
|
|
|
20,182 |
|
Flexible Packaging Films |
|
30,113 |
|
|
|
31,527 |
|
Total net sales |
|
169,070 |
|
|
|
185,079 |
|
Add back freight |
|
6,666 |
|
|
|
6,043 |
|
Sales as shown in the condensed consolidated statements of income |
$ |
175,736 |
|
|
$ |
191,122 |
|
EBITDA from Ongoing Operations (i) |
|
|
|
||||
Aluminum Extrusions: |
|
|
|
||||
Ongoing operations: |
|
|
|
||||
EBITDA (b) |
$ |
12,540 |
|
|
$ |
14,638 |
|
Depreciation & amortization |
|
(4,542 |
) |
|
|
(4,411 |
) |
EBIT (b) |
|
7,998 |
|
|
|
10,227 |
|
Plant shutdowns, asset impairments, restructurings and other (c) |
|
(1,167 |
) |
|
|
(493 |
) |
PE Films: |
|
|
|
||||
Ongoing operations: |
|
|
|
||||
EBITDA (b) |
|
6,904 |
|
|
|
1,849 |
|
Depreciation & amortization |
|
(1,329 |
) |
|
|
(1,643 |
) |
EBIT (b) |
|
5,575 |
|
|
|
206 |
|
Plant shutdowns, asset impairments, restructurings and other (c) |
|
(504 |
) |
|
|
2 |
|
Flexible Packaging Films: |
|
|
|
||||
Ongoing operations: |
|
|
|
||||
EBITDA (b) |
|
1,963 |
|
|
|
1,350 |
|
Depreciation & amortization |
|
(751 |
) |
|
|
(700 |
) |
EBIT (b) |
|
1,212 |
|
|
|
650 |
|
Plant shutdowns, asset impairments, restructurings and other (c) |
|
— |
|
|
|
(78 |
) |
Total |
|
13,114 |
|
|
|
10,514 |
|
Interest income |
|
22 |
|
|
|
44 |
|
Interest expense |
|
3,455 |
|
|
|
2,311 |
|
Gain on investment in kaleo, Inc. ("kaléo") (d) |
|
— |
|
|
|
262 |
|
Stock option-based compensation costs |
|
— |
|
|
|
231 |
|
Corporate expenses, net (c) |
|
5,736 |
|
|
|
8,956 |
|
Income (loss) before income taxes |
|
3,945 |
|
|
|
(678 |
) |
Income tax expense (benefit) |
|
657 |
|
|
|
331 |
|
Net income (loss) |
$ |
3,288 |
|
|
$ |
(1,009 |
) |
Tredegar Corporation |
||||||
Condensed Consolidated Balance Sheets |
||||||
(In Thousands) |
||||||
(Unaudited) |
||||||
|
|
|
|
|
||
|
|
March 31, 2024 |
|
December 31, 2023 |
||
Assets |
|
|
|
|
||
Cash & cash equivalents |
|
$ |
3,493 |
|
$ |
9,660 |
Restricted cash |
|
|
1,299 |
|
|
3,795 |
Accounts & other receivables, net |
|
|
73,032 |
|
|
67,938 |
Income taxes recoverable |
|
|
793 |
|
|
1,182 |
Inventories |
|
|
86,822 |
|
|
82,037 |
Prepaid expenses & other |
|
|
9,438 |
|
|
12,065 |
Total current assets |
|
|
174,877 |
|
|
176,677 |
Net property, plant and equipment |
|
|
177,972 |
|
|
183,455 |
Right-of-use leased assets |
|
|
16,761 |
|
|
11,848 |
Identifiable intangible assets, net |
|
|
9,364 |
|
|
9,851 |
Goodwill |
|
|
35,717 |
|
|
35,717 |
Deferred income taxes |
|
|
24,320 |
|
|
25,034 |
Other assets |
|
|
3,520 |
|
|
3,879 |
Total assets |
|
$ |
442,531 |
|
$ |
446,461 |
Liabilities and Shareholders’ Equity |
|
|
|
|
||
Accounts payable |
|
$ |
84,925 |
|
$ |
95,023 |
Accrued expenses |
|
|
23,083 |
|
|
24,442 |
Lease liability, short-term |
|
|
2,871 |
|
|
2,107 |
ABL revolving facility (matures on June 30, 2026) (h) |
|
|
128,330 |
|
|
126,322 |
Income taxes payable |
|
|
225 |
|
|
1,210 |
Total current liabilities |
|
|
239,434 |
|
|
249,104 |
Lease liability, long-term |
|
|
15,318 |
|
|
10,942 |
Long-term debt |
|
|
20,000 |
|
|
20,000 |
Pension and other postretirement benefit obligations, net |
|
|
6,582 |
|
|
6,643 |
Other non-current liabilities |
|
|
4,382 |
|
|
4,119 |
Shareholders’ equity |
|
|
156,815 |
|
|
155,653 |
Total liabilities and shareholders’ equity |
|
$ |
442,531 |
|
$ |
446,461 |
Tredegar Corporation |
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
|
|
|
||||||
|
|
Three Months Ended March 31, |
||||||
|
|
2024 |
|
2023 |
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net income (loss) |
|
$ |
3,288 |
|
|
$ |
(1,009 |
) |
Adjustments for noncash items: |
|
|
|
|
||||
Depreciation |
|
|
6,252 |
|
|
|
6,340 |
|
Amortization of intangibles |
|
|
464 |
|
|
|
503 |
|
Reduction of right-of-use lease asset |
|
|
610 |
|
|
|
551 |
|
Deferred income taxes |
|
|
623 |
|
|
|
411 |
|
Accrued pension income and post-retirement benefits |
|
|
54 |
|
|
|
3,418 |
|
Stock-based compensation expense |
|
|
686 |
|
|
|
186 |
|
Gain on investment in kaléo |
|
|
— |
|
|
|
(262 |
) |
Changes in assets and liabilities: |
|
|
|
|
||||
Accounts and other receivables |
|
|
(5,337 |
) |
|
|
(4,320 |
) |
Inventories |
|
|
(5,481 |
) |
|
|
14,840 |
|
Income taxes recoverable/payable |
|
|
(580 |
) |
|
|
(1,156 |
) |
Prepaid expenses and other |
|
|
1,890 |
|
|
|
1,816 |
|
Accounts payable and accrued expenses |
|
|
(10,306 |
) |
|
|
(28,977 |
) |
Lease liability |
|
|
(689 |
) |
|
|
(558 |
) |
Pension and postretirement benefit plan contributions |
|
|
(158 |
) |
|
|
(154 |
) |
Other, net |
|
|
965 |
|
|
|
(737 |
) |
Net cash provided by (used in) operating activities |
|
|
(7,719 |
) |
|
|
(9,108 |
) |
Cash flows from investing activities: |
|
|
|
|
||||
Capital expenditures |
|
|
(2,461 |
) |
|
|
(9,025 |
) |
Proceeds on sale of investment in kaléo |
|
|
— |
|
|
|
262 |
|
Proceeds from the sale of assets |
|
|
83 |
|
|
|
— |
|
Net cash provided by (used in) investing activities |
|
|
(2,378 |
) |
|
|
(8,763 |
) |
Cash flows from financing activities: |
|
|
|
|
||||
Borrowings |
|
|
179,248 |
|
|
|
37,250 |
|
Debt principal payments |
|
|
(177,240 |
) |
|
|
(19,250 |
) |
Dividends paid |
|
|
— |
|
|
|
(4,419 |
) |
Net cash provided by (used in) financing activities |
|
|
2,008 |
|
|
|
13,581 |
|
Effect of exchange rate changes on cash |
|
|
(574 |
) |
|
|
83 |
|
Increase (decrease) in cash, cash equivalents and restricted cash |
|
|
(8,663 |
) |
|
|
(4,207 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
|
13,455 |
|
|
|
19,232 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
4,792 |
|
|
$ |
15,025 |
|
Notes to the Financial Tables |
||
(Unaudited) |
||
(a) | Tredegar’s presentation of net income (loss) and diluted earnings (loss) per share from ongoing operations are non-GAAP financial measures that exclude the effects of gains or losses associated with plant shutdowns, asset impairments and restructurings, gains or losses from the sale of assets, goodwill impairment charges, net periodic benefit cost for the frozen defined benefit pension plan and other items (which includes gains and losses for an investment accounted for under the fair value method), which have been presented separately and removed from net income (loss) and diluted earnings (loss) per share as reported under GAAP. Net income (loss) and diluted earnings (loss) per share from ongoing operations are key financial and analytical measures used by management to gauge the operating performance of Tredegar’s ongoing operations. They are not intended to represent the stand-alone results for Tredegar’s ongoing operations under GAAP and should not be considered as an alternative to net income (loss) or earnings (loss) per share as defined by GAAP. They exclude items that management believes do not relate to Tredegar’s ongoing operations. A reconciliation to net income (loss) and diluted earnings (loss) per share from ongoing operations for the three months ended March 31, 2024 and 2023 is shown below: |
|
|
Three Months Ended March 31, |
|||||
($ in millions, except per share data) |
|
2024 |
2023 |
||||
Net income (loss) as reported under GAAP1 |
|
$ |
3.3 |
|
$ |
(1.0 |
) |
After-tax effects of: |
|
|
|
|
|||
(Gains) losses associated with plant shutdowns, asset impairments and restructurings |
|
|
0.4 |
|
|
0.1 |
|
(Gains) losses from sale of assets and other: |
|
|
|
|
|||
Gain associated with the investment in kaléo |
|
|
— |
|
|
(0.2 |
) |
Other |
|
|
1.9 |
|
|
1.0 |
|
Net periodic benefit cost for the frozen defined benefit pension plan in process of termination2 |
|
|
— |
|
|
2.6 |
|
Net income (loss) from ongoing operations1 |
|
$ |
5.6 |
|
$ |
2.5 |
|
|
|
|
|
|
|||
Earnings (loss) per share as reported under GAAP (diluted) |
|
$ |
0.10 |
|
$ |
(0.03 |
) |
After-tax effects per diluted share of: |
|
|
|
|
|||
(Gains) losses associated with plant shutdowns, asset impairments and restructurings |
|
|
0.01 |
|
|
— |
|
(Gains) losses from sale of assets and other: |
|
|
|
|
|||
Gain associated with the investment in kaléo |
|
|
— |
|
|
(0.01 |
) |
Other |
|
|
0.05 |
|
|
0.03 |
|
Net periodic benefit cost for the frozen defined benefit pension plan in process of termination2 |
|
|
— |
|
|
0.08 |
|
Earnings (loss) per share from ongoing operations (diluted) |
|
$ |
0.16 |
|
$ |
0.07 |
|
1. Reconciliations of the pre-tax and post-tax balances attributed to net income (loss) are shown in Note (e). 2. For more information, see Note (g). |
(b) | EBITDA (earnings before interest, taxes, depreciation and amortization) from ongoing operations is the key segment profitability metric used by the Company’s chief operating decision maker to assess segment financial performance. The Company uses sales less freight ("net sales") as its measure of revenues from external customers. For more business segment information, see Note 9 to the Company's Condensed Consolidated Financial Statements in the First Quarter Form 10-Q. |
|
EBIT (earnings before interest and taxes) from ongoing operations is a non-GAAP financial measure included in the accompanying tables and the reconciliation of segment financial information to consolidated results for the Company in the net sales and EBITDA from ongoing operations by segment statements. It is not intended to represent the stand-alone results for Tredegar’s ongoing operations under GAAP and should not be considered as an alternative to net income (loss) as defined by GAAP. The Company believes that EBIT is a widely understood and utilized metric that is meaningful to certain investors and that including this financial metric in the reconciliation of management’s performance metric, EBITDA from ongoing operations, provides useful information to those investors that primarily utilize EBIT to analyze the Company’s core operations. |
||
(c) | Gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for the three months ended March 31, 2024 and 2023 detailed below are shown in the statements of net sales and EBITDA from ongoing operations by segment and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the condensed consolidated statements of income, unless otherwise noted. |
|
Three Months Ended March 31, 2024 |
|||
($ in millions) |
Pre-Tax |
Net of Tax |
||
Aluminum Extrusions: |
|
|
||
(Gains) losses from sale of assets, investment writedowns and other items: |
|
|
||
Consulting expenses for ERP/MES project1 |
$ |
0.6 |
$ |
0.4 |
Storm damage to the |
|
0.1 |
|
0.1 |
Legal fees associated with the Aluminum Extruders Trade Case1 |
|
0.2 |
|
0.2 |
Total for Aluminum Extrusions |
$ |
0.9 |
$ |
0.7 |
PE Films: |
|
|
||
(Gains) losses from sale of assets, investment writedowns and other items: |
|
|
||
|
$ |
0.2 |
$ |
0.1 |
|
|
0.3 |
|
0.3 |
Total for PE Films |
$ |
0.5 |
$ |
0.4 |
Corporate: |
|
|||
(Gain) losses from sale of assets, investment writedowns and other items: |
|
|
||
Professional fees associated with business development activities1 |
$ |
0.5 |
$ |
0.4 |
Professional fees associated with remediation activities related to internal control over financial reporting1 |
|
0.9 |
|
0.7 |
Professional fees associated with the transition to the ABL Facility1 |
|
0.2 |
|
0.1 |
Total for Corporate |
$ |
1.6 |
$ |
1.2 |
1. Included in “Selling, R&D and general expenses” in the condensed consolidated statements of income. 2. For more information, refer to Note 1 to the Company's Condensed Consolidated Financial Statements in the First Quarter Form 10-Q. |
|
Three Months Ended March 31, 2023 |
|||||
($ in millions) |
Pre-Tax |
Net of Tax |
||||
Aluminum Extrusions: |
|
|
||||
(Gains) losses from sale of assets, investment writedowns and other items: |
|
|
||||
Storm damage to the |
$ |
0.6 |
|
$ |
0.4 |
|
Total for Aluminum Extrusions |
$ |
0.6 |
|
$ |
0.4 |
|
Flexible Packaging Films: |
|
|
||||
(Gains) losses associated with plant shutdowns, asset impairments and restructurings: |
|
|
||||
Other restructuring costs - severance |
$ |
0.1 |
|
$ |
0.1 |
|
Total for Flexible Packaging Films |
$ |
0.1 |
|
$ |
0.1 |
|
Corporate: |
|
|
||||
(Gain) losses from sale of assets, investment writedowns and other items: |
|
|
||||
Professional fees associated with business development activities1 |
$ |
0.3 |
|
$ |
0.3 |
|
Professional fees associated with remediation activities related to internal control over financial reporting1 |
|
0.5 |
|
|
0.4 |
|
Stock-based compensation expense associated with the fair value remeasurement of awards granted at the time of the 2020 Special Dividend1 |
|
(0.1 |
) |
|
(0.1 |
) |
Net periodic benefit cost for the frozen defined benefit pension plan in process of termination2 |
|
3.4 |
|
|
2.6 |
|
Total for Corporate |
$ |
4.1 |
|
$ |
3.2 |
|
|
(d) |
On December 27, 2021, the Company completed the sale of its investment interests in kaléo and received closing cash proceeds of |
|
(e) | Tredegar’s presentation of net income (loss) from ongoing operations is a non-GAAP financial measure that excludes the effects of gains or losses associated with plant shutdowns, asset impairments and restructurings, gains or losses from the sale of assets, goodwill impairment charges, net periodic benefit cost for the frozen defined benefit pension plan and other items (which includes unrealized gains and losses for an investment accounted for under the fair value method), which has been presented separately and removed from net income (loss) as reported under GAAP. Net income (loss) from ongoing operations is a key financial and analytical measure used by management to gauge the operating performance of Tredegar’s ongoing operations. It is not intended to represent the stand-alone results for Tredegar’s ongoing operations under GAAP and should not be considered as an alternative to net income (loss) as defined by GAAP. It excludes items that we believe do not relate to Tredegar’s ongoing operations. | |
Reconciliations of the pre-tax and post-tax balances attributed to net income (loss) from ongoing operations for the three months ended March 31, 2024 and 2023 are presented below in order to show the impact on the effective tax rate: |
($ in millions) |
Pre-tax |
|
Tax Expense (Benefit) |
|
After-Tax |
|
Effective Tax Rate |
||||||
Three Months Ended March 31, 2024 |
(a) |
|
(b) |
|
|
|
(b)/(a) |
||||||
Net income (loss) reported under GAAP |
$ |
3.9 |
|
|
$ |
0.6 |
|
$ |
3.3 |
|
|
16.7 |
% |
(Gains) losses associated with plant shutdowns, asset impairments and restructurings |
|
0.5 |
|
|
|
0.1 |
|
|
0.4 |
|
|
|
|
(Gains) losses from sale of assets and other |
|
2.5 |
|
|
|
0.6 |
|
|
1.9 |
|
|
|
|
Net income (loss) from ongoing operations |
$ |
6.9 |
|
|
$ |
1.3 |
|
$ |
5.6 |
|
|
19.0 |
% |
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
||||||
Net income (loss) reported under GAAP |
$ |
(0.7 |
) |
|
$ |
0.3 |
|
$ |
(1.0 |
) |
|
(48.8 |
)% |
(Gains) losses associated with plant shutdowns, asset impairments and restructurings |
|
0.1 |
|
|
|
— |
|
|
0.1 |
|
|
|
|
(Gains) losses from sale of assets and other |
|
1.0 |
|
|
|
0.2 |
|
|
0.8 |
|
|
|
|
Net periodic benefit cost for the frozen defined benefit pension plan in process of termination |
|
3.4 |
|
|
|
0.8 |
|
|
2.6 |
|
|
|
|
Net income (loss) from ongoing operations |
$ |
3.8 |
|
|
$ |
1.3 |
|
$ |
2.5 |
|
|
34.2 |
% |
(f) Net debt is calculated as follows: |
|
|
March 31, |
|
December 31, |
||
($ in millions) |
|
2024 |
|
2023 |
||
ABL revolving facility (matures on June 30, 2026) (h) |
|
$ |
128.3 |
|
$ |
126.3 |
Long-term debt |
|
|
20.0 |
|
|
20.0 |
Total debt |
|
|
148.3 |
|
|
146.3 |
Less: Cash and cash equivalents |
|
|
3.5 |
|
|
9.7 |
Less: Restricted cash |
|
|
1.3 |
|
|
3.8 |
Net debt |
|
$ |
143.5 |
|
$ |
132.8 |
Net debt is not intended to represent total debt as defined by GAAP. Net debt is utilized by management in evaluating the Company’s financial leverage and equity valuation, and management believes that investors also may find net debt to be helpful for the same purposes. |
||
(g) | Beginning in 2022, and consistent with no expected required minimum cash contributions, no pension expense has been included in calculating earnings before interest, taxes, depreciation and amortization as defined in the Second Amended and Restated Credit Agreement, which is used to compute certain borrowing ratios and to compute non-GAAP net income (loss) from ongoing operations. | |
(h) | The ABL Facility has customary representations and warranties including, as a condition to each borrowing, that all such representations and warranties are true and correct in all material respects (including a representation that no Material Adverse Effect (as defined in the ABL Facility) has occurred since December 31, 2022). In the event that the Company cannot certify that all conditions to the borrowing have been met, the lenders can restrict the Company’s future borrowings under the ABL Facility. Because a Cash Dominion Period (as defined in the ABL Facility) is currently in effect and the Company is required to represent that no Material Adverse Effect has occurred as a condition to borrowing, the outstanding debt under the ABL Facility (all contractual payments due on June 30, 2026) is classified as a current liability in the consolidated balance sheets. | |
In accordance with the ABL Facility, the lenders have been provided with the Company’s financial statements, covenant compliance certificates and projections to facilitate their ongoing assessment of the Company. Accordingly, the Company believes the likelihood that lenders would exercise the subjective acceleration clause whereby prohibiting future borrowings is remote. As of March 31, 2024, the Company was in compliance with all debt covenants. | ||
(i) | Tredegar’s presentation of Consolidated EBITDA from ongoing operations is a non-GAAP financial measure that excludes the effects of gains or losses associated with plant shutdowns, asset impairments and restructurings, gains or losses from the sale of assets, goodwill impairment charges, net periodic benefit cost for the frozen defined benefit pension plan and other items (which includes gains and losses for an investment accounted for under the fair value method). Consolidated EBITDA from ongoing operations also excludes depreciation & amortization, stock option-based compensation costs, interest and income taxes. Consolidated EBITDA is a key financial and analytical measure used by management to gauge the operating performance of Tredegar’s ongoing operations. It is not intended to represent the stand-alone results for Tredegar’s ongoing operations under GAAP and should not be considered as an alternative to net income (loss) or earnings (loss) per share as defined by GAAP. It excludes items that management believes do not relate to Tredegar’s ongoing operations. A reconciliation of Consolidated EBITDA from ongoing operations for the three months ended March 31, 2024 and 2023 is shown below: |
|
Three Months Ended March 31, |
|||||
($ in millions) |
2024 |
2023 |
||||
Net income (loss) as reported under GAAP1 |
$ |
3.3 |
|
$ |
(1.0 |
) |
After-tax effects of: |
|
|
|
|||
(Gains) losses associated with plant shutdowns, asset impairments and restructurings |
|
0.4 |
|
|
0.1 |
|
Gain associated with the investment in kaléo |
|
— |
|
|
(0.2 |
) |
(Gains) losses from sale of assets and other |
|
1.9 |
|
|
1.0 |
|
Net periodic benefit cost for the frozen defined benefit pension plan in process of termination2 |
|
— |
|
|
2.6 |
|
Net income (loss) from ongoing operations1 |
|
5.6 |
|
|
2.5 |
|
Depreciation and amortization |
|
6.7 |
|
|
6.8 |
|
Stock option-based compensation costs |
|
— |
|
|
0.2 |
|
Interest expense |
|
3.5 |
|
|
2.3 |
|
Income taxes from ongoing operations1 |
|
1.3 |
|
|
1.3 |
|
Consolidated EBITDA from ongoing operations |
$ |
17.1 |
|
$ |
13.1 |
|
1. Reconciliations of the pre-tax and post-tax balances attributed to net income (loss) are shown in Note (e). 2. For more information, see Note (g). |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240509797818/en/
Tredegar Corporation
Neill Bellamy, 804-330-1211
neill.bellamy@tredegar.com
Source: Tredegar Corporation
FAQ
What was Tredegar 's net income for the first quarter of 2024?
How did EBITDA for Aluminum Extrusions change in the first quarter of 2024?
What was the EBITDA for PE Films in the first quarter of 2024?
What was the sales volume change for Flexible Packaging Films in the first quarter of 2024?